Where we are: Gold is currently trading at 4573.8, up 0.90% on the session, finding support after yesterday’s dip. The intraday range has been relatively wide, from 4522.9 to 4585.0, suggesting continued volatility. This price action puts it well above yesterday’s close and near the high of the session.
What’s driving it: The primary driver behind gold’s upward momentum is the continued decline in US real yields. The 10-year TIPS yield has fallen to 1.91%, reinforcing gold’s appeal as a store of value. This move has been amplified by relatively rangebound DXY. The high-impact ISM Services PMI (10:00 ET) data release today will likely dictate the short-term trajectory, as better-than-expected figures could easily revive hawkish expectations and put pressure on bullion; the converse is also true. The market is still pricing considerable uncertainty around the Fed’s forward path.
- US 10Y Real Yield dropped to 1.91%, strengthening the non-yielding appeal of Gold.
- 10Y Breakeven Inflation at 2.5%, suggesting some confidence in inflation expectations and supporting gold’s safe-haven status.
- Net non-commercial positioning in Gold is modestly long at the 4th percentile, meaning there isn’t a considerable amount of speculative froth to be unwound.
NY session focus: Traders will be closely watching the 10:00 ET releases of the ISM Services PMI and JOLTS Job Openings for directional cues, with New Home Sales data providing additional color. A break above 4585.0 could open the door to further gains, while a move below 4522.9 could signal a retest of lower levels. The working trade remains buying dips on real-yield weakness. A hawkish surprise in today’s data could quickly put this trade at risk. The pain trade for gold is a strong dollar on the back of resurgent US economic data.